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|   |                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------|
| þ | ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF 1934     |
|   |                                                                                                    |
|   | For      the fiscal year ended December 31, 2008                                                   |
|   | OR                                                                                                      |
|   |                                                                                                    |
| o      | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF 1934 |
|   |                                                                                                    |
|   | For      the transition period from                to |

| Massachusetts                                                                              |   | 04-2211809                                |
|--------------------------------------------------------------------------------------------|--------|-------------------------------------------|
| (State      or other Jurisdiction of incorporation or organization)                        |   | (I.R.S.      Employer Identification No.) |
|                                                                                       |   |                                      |
| 60      Frontage Road, Andover, Massachusetts(Address      of Principal Executive Offices) |   | 01810-5498(Zip      Code)                 |

| Title      of each class                |   | Name      of exchange on which registered |
|-----------------------------------------|--------|-------------------------------------------|
| Common      Stock, $0.10 par value |   | Nasdaq      Global Market                 |

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DYNAMICS RESEARCHCORPORATION

|                      |      |                                                                                                                    |   |
|---------------------------|-----------|-------------------------------------------------------------------------------------------------------------------------|--------|
|                      | Page      |
|                      |      |
|  PART I         |      |
|                      | ITEM      |                                                                                                                    |
|                      |  1.  | Business                                                                                                                | 3      |
|                      |  1A. | Risk Factors                                                                                                            | 19     |
|                      |  1B. | Unresolved Staff Comments                                                                                               | 24     |
|                      |  2.  | Properties                                                                                                              | 24     |
|                      |  3.  | Legal Proceedings                                                                                                       | 24     |
|                      |  4.  | Submission of Matters to a Vote of Security      Holders                                                                | 25     |
|  PART       II  |      |
|                      | ITEM      |                                                                                                                    |
|                      |  5.  | Market for Registrant’s Common Equity, Related Stockholder      Matters and Issuer Purchases of Equity Securities | 26     |
|                      |  6.  | Selected Financial Data                                                                                                 | 28     |
|                      |  7.  | Management’s Discussion and Analysis of Financial Condition      and Results of Operations                        | 31     |
|                      |  7A. | Quantitative and Qualitative Disclosures About Market      Risk                                                         | 40     |
|                      |  8.  | Financial Statements and Supplementary    Data                                                                          | 41     |
|                      |  9.  | Changes in and Disagreements With Accountants on Accounting      and Financial Disclosure                               | 74     |
|                      |  9A. | Controls and Procedures                                                                                                 | 74     |
|                      |  9B. | Other Information                                                                                                       | 75     |
|  PART       III |      |
|                      | ITEM      |                                                                                                                    |
|                      |  10. | Directors, Executive Officers and Corporate      Governance                                                             | 76     |
|                      |  11. | Executive Compensation                                                                                                  | 76     |
|                      |  12. | Security Ownership of Certain Beneficial Owners and      Management and Related Stockholder Matters                     | 76     |
|                      |  13. | Certain Relationships and Related Transactions,      and  Director Independence                               | 76     |
|                      |  14. | Principal Accounting Fees and Services                                                                                  | 76     |
|  PART       IV  |      |
|                      | ITEM      |                                                                                                                    |
|                      |  15. | Exhibits and Financial Statement    Schedules                                                                           | 77     |

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ITEM 1. BUSINESS

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|   | •  | Department      of Homeland Security – EAGLE;     |
|--------|---------------|---------------------------------------------------------|
|   | •  | Department      of Homeland Security – PMSS;      |
|   | •  | Air      Force Depot – DESP II                    |
|   | •  | Army/Navy/Marine      Corps Logistics – LMMS      |
|   | •  | Office      of Personnel Management – TMA         |
|   | •  | Army      Research Institute                            |
|   | •  | Army      Training and Doctrine Command – STOC II |
|   | •  | Navy      Warfare Development Command                   |
|   | •  | Military      Medical Health – TEAMS              |

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ITEM 1A. RISK FACTORS

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|   | •  | adequately      estimate the resources required to complete a project;                      |
|--------|---------------|---------------------------------------------------------------------------------------------|
|   | •  | properly      determine the scope of an engagement; or                                 |
|   | •  | complete      our contractual obligation in a manner consistent with the project      plan. |

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|   | •  | the      number, size and timing of client projects commenced and completed during      a quarter; |
|--------|---------------|----------------------------------------------------------------------------------------------------|
|   | •  | contract      wins and losses;                                                                     |
|   | •  | changes      to existing contracts made by our customers;                                          |
|   | •  | bid      and proposal efforts undertaken;                                                          |
|   | •  | progress      on fixed-price projects during a given quarter;                                      |
|   | •  | employee      productivity and hiring, attrition and utilization  rates;                           |
|   | •  | rapid      changes in demand from our precision manufacturing    customers;                        |
|   | •  | accuracy      of estimates of resources required to complete ongoing      projects;                |
|   | •  | the      trend in interest rates; and                                                         |
|   | •  | general      economic conditions.                                                                  |

|   | •  | the      difficulty of assimilating the acquired operations and      personnel;                                                                             |
|--------|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | •  | the      potential disruption of our ongoing business and diversion of resources      and management time;                                                  |
|   | •  | the      potential failure to retain key personnel of the acquired      business;                                                                           |
|   | •  | the      difficulty of integrating systems, operations and      cultures; and                                                                          |
|   | •  | the      potential impairment of relationships with customers as a result of      changes in management or otherwise arising out of such      transactions. |

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ITEM 1B. UNRESOLVED STAFF COMMENTS

ITEM 2.  PROPERTIES

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

|                                |                                                                                             |   |
|-------------------------------------|--------------------------------------------------------------------------------------------------|--------|
| Name      and Position              | Age                                                                                              |
|                                |                                                                                             |
| James      P. Regan                 | 68                                                                                               |
|                                | President,      Chairman and Chief Executive Officer                                             |   |
| Richard      A. Covel               | 62                                                                                               |
|                                | Vice      President, General Counsel and Secretary                                               |   |
| David      Keleher                  | 59                                                                                               |
|                                | Senior      Vice President and Chief Financial Officer                                           |   |
| Steven      P. Wentzell             | 62                                                                                               |
|                                | Senior      Vice President and General Manager, Human Resources                                  |   |
| Lawrence      H. O’Brien, Jr. | 57                                                                                               |
|                                | Senior      Vice President and General Manager, Business Solutions and Business      Development |   |

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ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSURER PURCHASES OF EQUITYSECURITIES

|                                                |   | High   |   |   | Low    |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|
|  Fiscal      year ended December 31, 2008 |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 11.30  |   |   | $      | 8.72 |   |
|  Second      quarter                           |   | $      | 10.75  |   |   | $      | 9.25 |   |
|  Third      quarter                            |   | $      | 10.50  |   |   | $      | 7.58 |   |
|  Fourth      quarter                           |   | $      | 9.04   |   |   | $      | 5.00 |   |
|                                                |   |   |   |   |   |   |   |   |
|  Fiscal      year ended December 31, 2007 |   |   |   |   |   |   |   |   |
|  First      quarter                            |   | $      | 12.50  |   |   | $      | 8.55 |   |
|  Second      quarter                           |   | $      | 14.72  |   |   | $      | 10.66 |   |
|  Third      quarter                            |   | $      | 14.04  |   |   | $      | 10.19 |   |
|  Fourth      quarter                           |   | $      | 12.98  |   |   | $      | 9.16 |   |

|                                                  |   |              |   |   |          |   |   |              |   |   | Approximate              |   |
|-------------------------------------------------------|--------|-------------------|--------|--------|---------------|--------|--------|-------------------|--------|--------|--------------------------|--------|
|                                                  |   |              |   |   |          |   |   | Total Number |   |   | Dollar      Value        |   |
|                                                  |   |              |   |   |          |   |   | of      Shares    |   |   | of Shares that |   |
|                                                  |   |              |   |   |          |   |   | Purchased      as |   |   | May      Yet Be          |   |
|                                                  |   |              |   |   | Average       |   |   | Part      of      |   |   | Purchased                |   |
|                                                  |   | Total Number |   |   | Price         |   |   | Publicly          |   |   | Under      the           |   |
|                                                  |   | of      Shares    |   |   | Paid      Per |   |   | Announced         |   |   | Programs                 |   |
| Period                                                |   | Purchased (1)     |   |   | Share         |   |   | Programs          |   |   | (in      millions)       |   |
| October      1, 2008 to October 31, 2008              |   |              | 933    |   |          | $      | 6.33   |              |   |   | -                        |   |   | $ | - |   |
| November      1, 2008 to November 30, 2008            |   |              | -      |   |          |   | -      |              |   |   | -                        |   |   |   | - |   |
| December      1, 2008 to  December 31, 2008 |   |              | 97     |   |          |   | 6.60   |              |   |   | -                        |   |   |   | - |   |
| Total                                                 |   |              | 1,030  |   |          | $      | 6.35   |              |   |   | -                        |   |   | $ | - |   |

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|                                    |   | December      31, |   |
|-----------------------------------------|--------|-------------------|--------|
|                                    |   | 2003              |   |   | 2004 |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |
| Dynamics      Research Corporation      |   | $                 | 100.00 |   |   | $ | 110.53 |   |   | $ | 95.79 |   |   | $ | 60.45 |   |   | $ | 67.08 |   |   | $ | 49.60 |   |
| NASDAQ      Stock Market (US Companies) |   | $                 | 100.00 |   |   | $ | 108.84 |   |   | $ | 111.16 |   |   | $ | 122.11 |   |   | $ | 132.42 |   |   | $ | 63.80 |   |
| Peer      Group                         |   | $                 | 100.00 |   |   | $ | 133.46 |   |   | $ | 127.19 |   |   | $ | 131.01 |   |   | $ | 144.95 |   |   | $ | 141.82 |   |

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ITEM 6.  SELECTED FINANCIALDATA

|                                                                                                   |   | Year      ended December 31, |    |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
| (in      thousands, except per share data)                                                             |   | 2008(1)                           |    |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004(2) |   |
|  Revenue                                                                                          |   | $                                 | 242,824 |   |   | $ | 229,577 |   |   | $ | 258,987 |   |   | $ | 300,440 |   |   | $ | 275,706 |   |
| Gross      profit                                                                                      |   | $                                 | 39,164  |   |   | $ | 37,107 |   |   | $ | 35,116 |   |   | $ | 49,662 |   |   | $ | 42,983 |   |
|  Operating      income (loss)                                                                     |   | $                                 | (571    | ) |   | $ | 12,498 |   |   | $ | 8,171 |   |   | $ | 21,305 |   |   | $ | 17,507 |   |
|  Non-GAAP      operating income (3)                                                               |   | $                                 | 14,248  |   |   | $ | 12,679 |   |   |   |   |   |   |   | - |   |   |   |   |   |
|  Income      (loss) from continuing operations                                                    |   | $                                 | (1,255  | ) |   | $ | 7,102 |   |   | $ | 3,988 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |
|  Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | 84 |   |   |   | - |   |   |   | - |   |
|  Net      income (loss)                                                                           |   | $                                 | (1,255  | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |
|  Non-GAAP      net income (3)                                                                     |   | $                                 | 7,807   |   |   | $ | 7,211 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Earnings      (loss) per share — Basic                                                |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income      (loss) from continuing operations before cumulative effect of accounting      change |   | $                                 | (0.13   | ) |   | $ | 0.76 |   |   | $ | 0.44 |   |   | $ | 1.30 |   |   | $ | 1.10 |   |
|  Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | 0.01 |   |   |   | - |   |   |   | - |   |
|  Net      earnings (loss) per share — Basic                                            |   | $                                 | (0.13   | ) |   | $ | 0.76 |   |   | $ | 0.45 |   |   | $ | 1.30 |   |   | $ | 1.10 |   |
|  Non-GAAP      net earnings per share — Basic (3)                                      |   | $                                 | 0.82    |   |   | $ | 0.77 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Earnings      (loss) per share — Diluted                                              |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Income      (loss) from continuing operations before cumulative effect of accounting      change |   | $                                 | (0.13   | ) |   | $ | 0.74 |   |   | $ | 0.42 |   |   | $ | 1.24 |   |   | $ | 1.03 |   |
|  Cumulative      benefit of accounting change                                                     |   |                              | -       |   |   |   | - |   |   |   | 0.01 |   |   |   | - |   |   |   | - |   |
|  Net      earnings (loss) per share — Diluted                                          |   | $                                 | (0.13   | ) |   | $ | 0.74 |   |   | $ | 0.43 |   |   | $ | 1.24 |   |   | $ | 1.03 |   |
|  Non-GAAP      net earnings per share — Diluted (3)                                    |   | $                                 | 0.80    |   |   | $ | 0.75 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |                              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net      cash provided by operating activities                                                   |   | $                                 | 18,755  |   |   | $ | 2,945 |   |   | $ | 17,584 |   |   | $ | 25,032 |   |   | $ | 3,961 |   |
| Capital      expenditures                                                                              |   | $                                 | 2,010   |   |   | $ | 1,788 |   |   | $ | 2,482 |   |   | $ | 4,571 |   |   | $ | 4,544 |   |
| Depreciation                                                                                           |   | $                                 | 3,148   |   |   | $ | 3,081 |   |   | $ | 3,203 |   |   | $ | 3,719 |   |   | $ | 3,624 |   |
| EBITDA,      excluding provision for litigation effect(3)(4)                                           |   | $                                 | 20,051  |   |   | $ | 19,189 |   |   | $ | 14,772 |   |   | $ | 30,339 |   |   | $ | 23,815 |   |

|                                                                                             |   | As      of December 31, |      |
|--------------------------------------------------------------------------------------------------|--------|------------------------------|-----------|
| (dollars      in thousands, except per share data)                                               |   | 2008(1)                      |      |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004(2) |   |
| Total      assets                                                                                |   | $                            | 208,930   |   |   | $ | 149,953 |   |   | $ | 159,852 |   |   | $ | 187,753 |   |   | $ | 205,134 |   |
| Total      debt                                                                                  |   | $                            | 38,000    |   |   | $ | 7,737 |   |   | $ | 15,000 |   |   | $ | 25,412 |   |   | $ | 69,842 |   |
| Stockholders’      equity                                                                  |   | $                            | 81,475    |   |   | $ | 96,504 |   |   | $ | 84,314 |   |   | $ | 74,736 |   |   | $ | 61,867 |   |
| Return      on invested capital, excluding provision for litigation effect(3)      (5)           |   |                         | 9.9       | % |   |   | 7.5 | % |   |   | 5.3 | % |   |   | 12.9 | % |   |   | 8.1 | % |
| Stockholders’      equity per share(6)                                                     |   | $                            | 8.42      |   |   | $ | 10.15 |   |   | $ | 8.99 |   |   | $ | 8.16 |   |   | $ | 7.02 |   |
| Return      on stockholders’ equity, excluding provision for litigation effect(3)      (7) |   |                         | 9.6       | % |   |   | 7.5 | % |   |   | 4.9 | % |   |   | 15.4 | % |   |   | 15.3 | % |
| Funded      backlog                                                                              |   | $                            | 149,201   |   |   | $ | 116,471 |   |   | $ | 92,903 |   |   | $ | 144,571 |   |   | $ | 165,017 |   |
| Number      of shares outstanding                                                                |   |                         | 9,674,512 |   |   |   | 9,509,849 |   |   |   | 9,314,962 |   |   |   | 9,096,893 |   |   |   | 8,737,562 |   |

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| (1)  | Amounts      include results of operations of Kadix (acquired August 1, 2008) for      the period subsequent to our acquisition.                                                                                                                                                                                                                                                    |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       | Amounts      include results of operations of Impact Innovations (acquired      September 1, 2004) for the period subsequent to our      acquisition.                                                                                                                                                                                                                               |
| (3)       | Non-GAAP      financial data is discussed under the title “Non-GAAP Financial Measures”,      included within this Item 6.                                                                                                                                                                                                                                                   |
| (4)  | Earnings      before interest, taxes, depreciation and amortization, or EBITDA, is      defined as GAAP income from continuing operations plus net interest      expense, income taxes, depreciation expense and amortization      expense.  EBITDA as calculated by us may be calculated      differently than EBITDA for other companies.                                    |
| (5)       | Return      on invested capital is calculated by dividing operating income (or      non-GAAP operating income in 2008 and 2007), net of related income taxes,      by the ending invested capital.  Invested capital is the sum of      outstanding debt and stockholders’ equity, minus cash, normalized for the      investment made for acquisitions during the year. |
| (6)       | Stockholders’      equity per share is calculated by dividing ending stockholders’ equity by      the number of shares outstanding at the end of the  period.                                                                                                                                                                                                                |
| (7)       | Return      on stockholders’ equity is calculated by dividing net income (or non-GAAP      net income in 2008 and 2007) by ending stockholders  equity.                                                                                                                                                                                                                            |

|   | • |   | the      ability to make more meaningful period-to-period comparisons of our      ongoing operating results;                      |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|   | • |   | the      ability to better identify trends in our underlying business and perform      related trend analysis;                    |
|   | • |   | a      higher degree of transparency for certain expenses (particularly when a      specific charge impacts multiple line items); |
|   | • |   | a      better understanding of how management plans and measures our underlying      business; and                                |
|   | • |   | an      easier way to compare our most recent results of operations against      investor and analyst financialmodels.            |

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|                                                                |   | Year      Ended December 31, |      |
|---------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                |   | 2008                         |      |   | 2007 |   |
| (in      thousands)                                                 |   | $                            |      |   | %(1) |   |   | $ |   |   | %(1) |   |
| GAAP      operating income (loss)                                   |   | $                            | (571      | ) |   |   | (0.2 | )% |   | $ | 12,498 |   |   |   | 5.4 | % |
| Provision      for litigation                                       |   |                         | 14,819    |   |   |   | 6.1 | % |   |   | 181 |   |   |   | 0.1 | % |
| Non-GAAP      operating income                                      |   | $                            | 14,248    |   |   |   | 5.9 | % |   | $ | 12,679 |   |   |   | 5.5 | % |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      income (loss) before provision (benefit) for income taxes |   | $                            | (1,959    | ) |   |   | (0.8 | )% |   | $ | 11,784 |   |   |   | 5.1 | % |
| Provision      for litigation                                       |   |                         | 14,819    |   |   |   | 6.1 | % |   |   | 181 |   |   |   | 0.1 | % |
| Non-GAAP      income before provision for income taxes              |   | $                            | 12,860    |   |   |   | 5.3 | % |   | $ | 11,965 |   |   |   | 5.2 | % |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      provision (benefit) for income taxes(2)                   |   | $                            | (704      | ) |   |   | 35.9 | % |   | $ | 4,682 |   |   |   | 39.7 | % |
| Tax      benefit for provision for litigation(2)                    |   |                         | 5,757     |   |   |   | 38.8 | % |   |   | 72 |   |   |   | 39.8 | % |
| Non-GAAP      provision for income taxes(2)                         |   | $                            | 5,053     |   |   |   | 39.3 | % |   | $ | 4,754 |   |   |   | 39.7 | % |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      net income (loss)                                         |   | $                            | (1,255    | ) |   |   | (0.5 | )% |   | $ | 7,102 |   |   |   | 3.1 | % |
| Provision      for litigation, net of tax benefit                   |   |                         | 9,062     |   |   |   | 3.7 | % |   |   | 109 |   |   |   | 0.0 | % |
| Non-GAAP      net income                                            |   | $                            | 7,807     |   |   |   | 3.2 | % |   | $ | 7,211 |   |   |   | 3.1 | % |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share                                      |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      Basic                                                     |   | $                            | (0.13     | ) |   |   |   |   |   | $ | 0.76 |   |   |   |   |   |
| Per      share effect of provision for litigation                   |   |                         | 0.95      |   |   |   |   |   |   |   | 0.01 |   |   |   |   |   |
| Non-GAAP      Basic                                                 |   | $                            | 0.82      |   |   |   |   |   |   | $ | 0.77 |   |   |   |   |   |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| GAAP      Diluted                                                   |   | $                            | (0.13     | ) |   |   |   |   |   | $ | 0.74 |   |   |   |   |   |
| Per      share effect of provision for litigation                   |   |                         | 0.93      |   |   |   |   |   |   |   | 0.01 |   |   |   |   |   |
| Non-GAAP      Diluted                                               |   | $                            | 0.80      |   |   |   |   |   |   | $ | 0.75 |   |   |   |   |   |
|                                                                |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                            |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      (GAAP diluted for 2008)                                  |   |                         | 9,493,495 |   |   |   |   |   |   |   | 9,326,907 |   |   |   |   |   |
| Diluted      (Non-GAAP for 2008)                                    |   |                         | 9,704,789 |   |   |   |   |   |   |   | 9,649,897 |   |   |   |   |   |

| (1) | Represents      a percentage of total revenue.                                                                                                                                                                  |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The      percent amounts represent a percentage of GAAP income (loss) before      provision for income taxes, provision for litigation and non-GAAP income      before provision for income taxes,respectively. |

|                                                              |   | Year      ended December 31, |   |
|-------------------------------------------------------------------|--------|-----------------------------------|--------|
| (in      thousands)                                               |   | 2008                              |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |
|  Income      (loss) from continuing operations               |   | $                                 | (1,255 | ) |   | $ | 7,102 |   |   | $ | 3,988 |   |   | $ | 11,433 |   |   | $ | 9,373 |   |
|  Interest      expense, net                                  |   |                              | 1,423  |   |   |   | 1,541 |   |   |   | 2,042 |   |   |   | 4,367 |   |   |   | 2,225 |   |
|  Provision      (benefit) for income taxes                   |   |                              | (704   | ) |   |   | 4,682 |   |   |   | 2,730 |   |   |   | 7,781 |   |   |   | 6,269 |   |
|  Depreciation      expense                                   |   |                              | 3,148  |   |   |   | 3,081 |   |   |   | 3,203 |   |   |   | 3,719 |   |   |   | 3,624 |   |
|  Amortization      expense                                   |   |                              | 2,620  |   |   |   | 2,602 |   |   |   | 2,809 |   |   |   | 3,039 |   |   |   | 2,324 |   |
|  EBITDA                                                      |   |                              | 5,232  |   |   |   | 19,008 |   |   |   | 14,772 |   |   |   | 30,339 |   |   |   | 23,815 |   |
|  Add      back: provision for litigation, net of tax benefit |   |                              | 9,062  |   |   |   | 181 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  EBITDA,      excluding provision for litigation effect      |   | $                                 | 14,294 |   |   | $ | 19,189 |   |   | $ | 14,772 |   |   | $ | 30,339 |   |   | $ | 23,815 |   |

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

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|                                                           |   | Year      Ended December 31, |   |
|----------------------------------------------------------------|--------|------------------------------|--------|
|                                                           |   | 2008                         |   |   | 2007 |   |   | 2006 |   |
|  (in      millions)                                       |   | $(1)                         |   |   | % |   |   | $(1) |   |   | % |   |   | $(1) |   |   | % |   |
|  Contract      revenue                                    |   | $                            | 236.8  |   |   |   | 97.5 | % |   | $ | 224.7 |   |   |   | 97.9 | % |   | $ | 252.9 |   |   |   | 97.6 | % |
|  Product      sales                                       |   |                         | 6.0    |   |   |   | 2.5 |   |   |   | 4.9 |   |   |   | 2.1 |   |   |   | 6.1 |   |   |   | 2.4 |   |
|  Total      revenue                                       |   | $                            | 242.8  |   |   |   | 100.0 | % |   | $ | 229.6 |   |   |   | 100.0 | % |   | $ | 259.0 |   |   |   | 100.0 | % |
|                                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross      profit on contract revenue(2)                 |   | $                            | 39.0   |   |   |   | 16.5 | % |   | $ | 37.2 |   |   |   | 16.5 | % |   | $ | 33.9 |   |   |   | 13.4 | % |
|  Gross      profit (loss) on product sales(2)             |   |                         | 0.2    |   |   |   | 2.8 | % |   |   | (0.1 | ) |   |   | (1.1 | )% |   |   | 1.2 |   |   |   | 19.7 | % |
|  Total      gross profit(2)                               |   |                         | 39.2   |   |   |   | 16.1 | % |   |   | 37.1 |   |   |   | 16.2 | % |   |   | 35.1 |   |   |   | 13.6 | % |
|                                                           |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Selling,      general and administrative                 |   |                         | 22.3   |   |   |   | 9.2 | % |   |   | 21.8 |   |   |   | 9.5 | % |   |   | 24.1 |   |   |   | 9.3 | % |
|  Provision      for litigation                            |   |                         | 14.8   |   |   |   | 6.1 | % |   |   | 0.2 |   |   |   | 0.1 | % |   |   | - |   |   |   | 0.0 | % |
|  Amortization      of intangible assets                   |   |                         | 2.6    |   |   |   | 1.1 | % |   |   | 2.6 |   |   |   | 1.1 | % |   |   | 2.8 |   |   |   | 1.1 | % |
|  Operating      Income (loss)                             |   |                         | (0.6   | ) |   |   | (0.2 | )% |   |   | 12.5 |   |   |   | 5.4 | % |   |   | 8.2 |   |   |   | 3.2 | % |
|  Interest      expense, net                               |   |                         | (1.4   | ) |   |   | (0.6 | )% |   |   | (1.5 | ) |   |   | (0.7 | )% |   |   | (2.0 | ) |   |   | (0.8 | )% |
|  Other      income, net                                   |   |                         | 0.0    |   |   |   | 0.0 | % |   |   | 0.8 |   |   |   | 0.4 | % |   |   | 0.6 |   |   |   | 0.2 | % |
|  Provision      (benefit) for income taxes(3)             |   |                         | (0.7   | ) |   |   | 35.9 | % |   |   | 4.7 |   |   |   | 39.7 | % |   |   | 2.7 |   |   |   | 40.6 | % |
|  Cumulative      benefit of accounting change, net of tax |   |                         | -      |   |   |   | 0.0 | % |   |   | - |   |   |   | 0.0 | % |   |   | 0.1 |   |   |   | 0.0 | % |
|  Net      income (loss)                                   |   | $                            | (1.3   | ) |   |   | (0.5 | )% |   | $ | 7.1 |   |   |   | 3.1 | % |   | $ | 4.1 |   |   |   | 1.6 | % |

| (1) | Totals      may not add due to rounding.                                                                                             |
|-----|--------------------------------------------------------------------------------------------------------------------------------------|
| (2) | These      amounts represent a percentage of contract revenues, product sales and      total revenues, respectively.                 |
| (3) | The      percentage for provision (benefit) for income taxes relate to a percentage      of income before provision for incometaxes. |

|                                            |   | Year      Ended December 31, |   |
|-------------------------------------------------|--------|------------------------------|--------|
|                                            |   | 2008                         |   |   | 2007 |   |   | 2006 |   |
| (in    millions)                                |   | $      (1)                   |   |   | %      (1) |   |   | $      (1) |   |   | %      (1) |   |   | $      (1) |   |   | %      (1) |   |
| National      defense and intelligence agencies |   | $                            | 156.8  |   |   |   | 66.3 | % |   | $ | 179.1 |   |   |   | 79.7 | % |   | $ | 206.0 |   |   |   | 81.4 | % |
| Federal      civilian agencies                  |   |                         | 32.9   |   |   |   | 13.9 |   |   |   | 27.5 |   |   |   | 12.2 |   |   |   | 27.9 |   |   |   | 11.0 |   |
| Homeland      security                          |   |                         | 19.3   |   |   |   | 8.1 |   |   |   | 3.9 |   |   |   | 1.7 |   |   |   | 2.7 |   |   |   | 1.1 |   |
| State      and local government agencies        |   |                         | 25.8   |   |   |   | 10.9 |   |   |   | 13.6 |   |   |   | 6.1 |   |   |   | 15.3 |   |   |   | 6.0 |   |
| Other                                           |   |                         | 2.0    |   |   |   | 0.8 |   |   |   | 0.7 |   |   |   | 0.3 |   |   |   | 1.1 |   |   |   | 0.4 |   |
| Total      contract revenue                     |   | $                            | 236.8  |   |   |   | 100.0 | % |   | $ | 224.7 |   |   |   | 100.0 | % |   | $ | 252.9 |   |   |   | 100.0 | % |

| (1) | Totals      may not add due to rounding. |
|-----|------------------------------------------|

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|                                                     |   | Year      Ended December 31, |   |
|----------------------------------------------------------|--------|------------------------------|--------|
|                                                     |   | 2008                         |   |   | 2007 |   |   | 2006 |   |
|  Time      and materials                            |   |                         | 49     | % |   |   | 57 | % |   |   | 62 | % |
|  Cost      reimbursable                             |   |                         | 18     |   |   |   | 22 |   |   |   | 19 |   |
|  Fixed      price, including service type contracts |   |                         | 33     |   |   |   | 21 |   |   |   | 19 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |
|                                                     |   |                         |   |   |   |   |   |   |   |   |   |   |
|  Prime      contract                                |   |                         | 63     | % |   |   | 56 | % |   |   | 67 | % |
|  Sub-contract                                       |   |                         | 37     |   |   |   | 44 |   |   |   | 33 |   |
|                                                     |   |                         | 100    | % |   |   | 100 | % |   |   | 100 | % |

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|                               |   | Payments      due by period |   |
|------------------------------------|--------|-----------------------------|--------|
|                               |   |                        |   |   | Less      than |   |   | Two      to |   |   | Four      to |   |   |   |   |
| (in      millions)                 |   | Total                       |   |   | one      year |   |   | three      years |   |   | five      years |   |   | Thereafter |   |
| Long-term      debt                |   | $                           | 38.0   |   |   | $ | 8.0 |   |   | $ | 16.0 |   |   | $ | 14.0 |   |   | $ | - |   |
| Interest      payments             |   |                        | 2.5    |   |   |   | 0.9 |   |   |   | 1.2 |   |   |   | 0.4 |   |   |   | - |   |
| Operating      leases              |   |                        | 26.9   |   |   |   | 7.1 |   |   |   | 9.8 |   |   |   | 5.2 |   |   |   | 4.8 |   |
| Total      contractual obligations |   | $                           | 67.4   |   |   | $ | 16.0 |   |   | $ | 27.0 |   |   | $ | 19.6 |   |   | $ | 4.8 |   |

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

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ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA

|                                                                                                                                                                |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                | Page   |
|                                                                                                                                                                |   |
|  Report of Independent Registered Public Accounting      Firm                                                                                                  | 42     |
|  Consolidated Balance Sheets as of December 31, 2008 and      2007                                                                                        | 43     |
|  Consolidated Statements of Operations for the years ended      December 31, 2008, 2007 and 2006                                                          | 44     |
|  Consolidated Statements of Changes in Stockholders’ Equity and      Comprehensive Income for the years ended December 31, 2008, 2007 and      2006 | 45     |
|  Consolidated Statements of Cash Flows for the years ended      December 31, 2008, 2007 and 2006                                                          | 46     |
|  Notes to Consolidated Financial    Statements                                                                                                                 | 47     |
|  Schedule II — Valuation and Qualifying Accounts and      Reserves                                                                             | 73     |

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REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATED BALANCESHEETS

|                                                                                                                                                                          |   | December      31, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                                                                          |   | 2008              |    |   | 2007 |   |
| Assets                                                                                                                                                                        |   |              |    |   |   |   |
| Current      assets                                                                                                                                                           |   |              |    |   |   |   |
| Cash      and cash equivalents                                                                                                                                                |   | $                 | 7,111   |   |   | $ | 2,006 |   |
| Contract      receivables, net                                                                                                                                                |   |              | 71,438  |   |   |   | 63,570 |   |
| Prepaid      expenses and other current assets                                                                                                                                |   |              | 2,491   |   |   |   | 2,508 |   |
| Total      current assets                                                                                                                                                     |   |              | 81,040  |   |   |   | 68,084 |   |
| Noncurrent      assets                                                                                                                                                        |   |              |    |   |   |   |   |   |
| Property      and equipment, net                                                                                                                                              |   |              | 9,349   |   |   |   | 10,182 |   |
| Goodwill                                                                                                                                                                      |   |              | 97,641  |   |   |   | 63,055 |   |
| Intangible      assets, net                                                                                                                                                   |   |              | 7,379   |   |   |   | 3,069 |   |
| Deferred      tax asset                                                                                                                                                       |   |              | 10,396  |   |   |   | 1,484 |   |
| Other      noncurrent assets                                                                                                                                                  |   |              | 3,125   |   |   |   | 4,079 |   |
| Total      noncurrent assets                                                                                                                                                  |   |              | 127,890 |   |   |   | 81,869 |   |
| Total      assets                                                                                                                                                             |   | $                 | 208,930 |   |   | $ | 149,953 |   |
|                                                                                                                                                                          |   |              |    |   |   |   |   |   |
| Liabilities      and stockholders' equity                                                                                                                                     |   |              |    |   |   |   |   |   |
| Current      liabilities                                                                                                                                                      |   |              |    |   |   |   |   |   |
| Current      portion of long-term debt                                                                                                                                        |   | $                 | 8,000   |   |   | $ | - |   |
| Accounts      payable                                                                                                                                                         |   |              | 18,095  |   |   |   | 12,163 |   |
| Accrued      compensation and employee benefits                                                                                                                               |   |              | 13,644  |   |   |   | 13,409 |   |
| Deferred      taxes                                                                                                                                                           |   |              | 2,670   |   |   |   | 8,486 |   |
| Other      accrued expenses                                                                                                                                                   |   |              | 24,760  |   |   |   | 3,078 |   |
| Total      current liabilities                                                                                                                                                |   |              | 67,169  |   |   |   | 37,136 |   |
| Long-term      liabilities                                                                                                                                                    |   |              |    |   |   |   |   |   |
| Long-term      debt                                                                                                                                                           |   |              | 30,000  |   |   |   | 7,737 |   |
| Other      long-term liabilities                                                                                                                                              |   |              | 30,286  |   |   |   | 8,576 |   |
| Total      long-term liabilities                                                                                                                                              |   |              | 60,286  |   |   |   | 16,313 |   |
| Total      liabilities                                                                                                                                                        |   |              | 127,455 |   |   |   | 53,449 |   |
| Commitments      and contingencies                                                                                                                                            |   |              |    |   |   |   |   |   |
| Stockholders'      equity                                                                                                                                                     |   |              |    |   |   |   |   |   |
| Preferred      stock, $0.10 par value; 5,000,000 shares authorized; no shares      issued                                                                                     |   |              | -       |   |   |   | - |   |
| Common      stock, $0.10 par value; 30,000,000 shares authorized; 9,674,512 and      9,509,849 shares issued and outstanding at December 31, 2008 and 2007,      respectively |   |              | 967     |   |   |   | 951 |   |
| Capital      in excess of par value                                                                                                                                           |   |              | 51,919  |   |   |   | 50,251 |   |
| Accumulated      other comprehensive loss, net of tax                                                                                                                         |   |              | (22,268 | ) |   |   | (6,745 | ) |
| Retained      earnings                                                                                                                                                        |   |              | 50,857  |   |   |   | 52,047 |   |
| Total      stockholders' equity                                                                                                                                               |   |              | 81,475  |   |   |   | 96,504 |   |
| Total      liabilities and stockholders' equity                                                                                                                               |   | $                 | 208,930 |   |   | $ | 149,953 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATEDSTATEMENTS OF OPERATIONS

|                                                             |   | Year      Ended December 31, |      |
|------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                             |   | 2008                         |      |   | 2007 |   |   | 2006 |   |
| Contract      revenue                                            |   | $                            | 236,796   |   |   | $ | 224,676 |   |   | $ | 252,890 |   |
| Product      sales                                               |   |                         | 6,028     |   |   |   | 4,901 |   |   |   | 6,097 |   |
| Total      revenue                                               |   |                         | 242,824   |   |   |   | 229,577 |   |   |   | 258,987 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Cost      of contract revenue                                    |   |                         | 197,802   |   |   |   | 187,516 |   |   |   | 218,976 |   |
| Cost      of product sales                                       |   |                         | 5,858     |   |   |   | 4,954 |   |   |   | 4,895 |   |
| Total      cost of  revenue                            |   |                         | 203,660   |   |   |   | 192,470 |   |   |   | 223,871 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Gross      profit on contract revenue                            |   |                         | 38,994    |   |   |   | 37,160 |   |   |   | 33,914 |   |
| Gross      profit (loss) on product sales                        |   |                         | 170       |   |   |   | (53 | ) |   |   | 1,202 |   |
| Total      gross profit                                          |   |                         | 39,164    |   |   |   | 37,107 |   |   |   | 35,116 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expenses                |   |                         | 22,296    |   |   |   | 21,826 |   |   |   | 24,136 |   |
| Provision      for litigation                                    |   |                         | 14,819    |   |   |   | 181 |   |   |   | - |   |
| Amortization      of intangible assets                           |   |                         | 2,620     |   |   |   | 2,602 |   |   |   | 2,809 |   |
| Operating      income (loss)                                     |   |                         | (571      | ) |   |   | 12,498 |   |   |   | 8,171 |   |
| Interest      expense, net                                       |   |                         | (1,423    | ) |   |   | (1,541 | ) |   |   | (2,042 | ) |
| Other      income, net                                           |   |                         | 35        |   |   |   | 827 |   |   |   | 589 |   |
| Income      (loss) before provision (benefit) for income taxes   |   |                         | (1,959    | ) |   |   | 11,784 |   |   |   | 6,718 |   |
| Provision      (benefit) for income taxes                        |   |                         | (704      | ) |   |   | 4,682 |   |   |   | 2,730 |   |
| Income      (loss) before cumulative effect of accounting change |   |                         | (1,255    | ) |   |   | 7,102 |   |   |   | 3,988 |   |
| Cumulative      benefit of accounting change, net of tax of $62  |   |                         | -         |   |   |   | - |   |   |   | 84 |   |
| Net      income (loss)                                           |   | $                            | (1,255    | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                            |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      (loss) before cumulative effect of accounting change |   | $                            | (0.13     | ) |   | $ | 0.76 |   |   | $ | 0.44 |   |
| Cumulative      effect of accounting change                      |   |                         | -         |   |   |   | - |   |   |   | 0.01 |   |
| Net      income (loss)                                           |   | $                            | (0.13     | ) |   | $ | 0.76 |   |   | $ | 0.45 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Diluted                                                          |   |                         |      |   |   |   |   |   |   |   |   |   |
| Income      (loss) before cumulative effect of accounting change |   | $                            | (0.13     | ) |   | $ | 0.74 |   |   | $ | 0.42 |   |
| Cumulative      effect of accounting change                      |   |                         | -         |   |   |   | - |   |   |   | 0.01 |   |
| Net      income (loss)                                           |   | $                            | (0.13     | ) |   | $ | 0.74 |   |   | $ | 0.43 |   |
|                                                             |   |                         |      |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                         |   |                         |      |   |   |   |   |   |   |   |   |   |
| Basic                                                            |   |                         | 9,493,495 |   |   |   | 9,326,907 |   |   |   | 9,099,897 |   |
| Diluted                                                          |   |                         | 9,493,495 |   |   |   | 9,649,897 |   |   |   | 9,426,535 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY ANDCOMPREHENSIVE INCOME (LOSS)

|                                                                                                            |   |                     |   |   |           |   |   | Capital        |   |   |          |   |   | Accumulated |   |   |     |   |    |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|----------------|--------|--------|----------------|--------|--------|---------------|--------|--------|-------------|--------|--------|----------|--------|---------|--------|--------|
|                                                                                                            |   |                     |   |   |           |   |   | In      Excess |   |   |          |   |   | Other       |   |   |     |   |    |   |   |
|                                                                                                            |   | Common      Stock Issued |   |   | of      Par    |   |   | Unearned       |   |   | Comprehensive |   |   | Retained    |   |   |     |   |
|                                                                                                            |   | Shares                   |   |   | Par      value |   |   | Value          |   |   | Compensation  |   |   | Loss        |   |   | Earnings |   |    | Total  |   |
| Balance      December 31, 2005                                                                                  |   |                     | 9,097  |   |           | $      | 910    |           |   | $      | 45,571        |   |   | $           | (1,850 | )      |     | $      | (10,768 | )      |   | $ | 40,873 |   |   | $ | 74,736 |   |
| Comprehensive      income:                                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 4,072 |   |   |   | 4,072 |   |
| Other      comprehensive income, net of tax:                                                                    |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Minimum      pension liability adjustment                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 1,562   |   |   |   | - |   |   |   | 1,562 |   |
| Comprehensive      income                                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 5,634 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 192    |   |           |   | 19     |           |   |   | 1,875         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,894 |   |
| Issuance      of restricted stock                                                                               |   |                     | 70     |   |           |   | 7      |           |   |   | (7            | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (30    | )      |           |   | (3     | )              |   |   | 3             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (14    | )      |           |   | (2     | )              |   |   | (191          | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (193 | ) |
| Share-based      compensation                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | 2,082         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 2,082 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 161           |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 161 |   |
| Reversal      of unearned compensation upon adoption of FASB Statement No. 123(R      )                         |   |                     | -      |   |           |   | -      |           |   |   | (1,850        | )      |   |        | 1,850  |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Balance      at December 31, 2006                                                                               |   |                     | 9,315  |   |           |   | 931    |           |   |   | 47,644        |   |   |        | -      |   |     |   | (9,206  | )      |   |   | 44,945 |   |   |   | 84,314 |   |
| Comprehensive      income:                                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 7,102 |   |   |   | 7,102 |   |
| Other      comprehensive income, net of tax:                                                                    |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Pension      liability adjustment                                                                               |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 2,353   |   |   |   | - |   |   |   | 2,353 |   |
| Unrealized      gains on investments, net of reclassification adjustment                                        |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | 108     |   |   |   | - |   |   |   | 108 |   |
| Other      comprehensive income                                                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 2,461 |   |
| Comprehensive      income                                                                                       |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 9,563 |   |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 135    |   |           |   | 14     |           |   |   | 1,166         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,180 |   |
| Issuance      of restricted stock                                                                               |   |                     | 99     |   |           |   | 10     |           |   |   | (10           | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (20    | )      |           |   | (2     | )              |   |   | 2             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (19    | )      |           |   | (2     | )              |   |   | (200          | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (202 | ) |
| Share-based      compensation                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | 1,640         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,640 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 77            |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 77 |   |
| Tax      deficiency on equity awards                                                                            |   |                     | -      |   |           |   | -      |           |   |   | (68           | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (68 | ) |
| Balance      at December 31, 2007, as previously presented                                                      |   |                     | 9,510  |   |           |   | 951    |           |   |   | 50,251        |   |   |        | -      |   |     |   | (6,745  | )      |   |   | 52,047 |   |   |   | 96,504 |   |
| Impact      of change in measurement date from adoption of SFAS 158                                             |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | 65 |   |   |   | 65 |   |
| Balance      at December 31, 2007, adjusted                                                                     |   |                     | 9,510  |   |           |   | 951    |           |   |   | 50,251        |   |   |        | -      |   |     |   | (6,745  | )      |   |   | 52,112 |   |   |   | 96,569 |   |
| Comprehensive      loss:                                                                                        |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | (1,255 | ) |   |   | (1,255 | ) |
| Other      comprehensive loss, net of tax:                                                                      |   |                     |   |   |           |   |   |           |   |   |          |   |   |        |   |   |     |   |    |   |   |   |   |   |   |   |   |   |
| Pension      liability adjustment, net of reclassification adjustment                                           |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | (14,896 | )      |   |   | - |   |   |   | (14,896 | ) |
| Reclassification      adjustment for gains realized in net loss                                                 |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | (108    | )      |   |   | - |   |   |   | (108 | ) |
| Unrealized      loss on derivative instruments                                                                  |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | (519    | )      |   |   | - |   |   |   | (519 | ) |
| Other      comprehensive loss                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (15,523 | ) |
| Comprehensive      loss                                                                                         |   |                     | -      |   |           |   | -      |           |   |   | -             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (16,778 | ) |
| Issuance      of common stock through stock option exercises and employee stock purchase      plan transactions |   |                     | 128    |   |           |   | 12     |           |   |   | 843           |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 855 |   |
| Issuance      of restricted stock                                                                               |   |                     | 92     |   |           |   | 9      |           |   |   | (9            | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture      of restricted stock                                                                             |   |                     | (13    | )      |           |   | (1     | )              |   |   | 1             |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | - |   |
| Release      of restricted stock                                                                                |   |                     | (42    | )      |           |   | (4     | )              |   |   | (418          | )      |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | (422 | ) |
| Share-based      compensation                                                                                   |   |                     | -      |   |           |   | -      |           |   |   | 1,148         |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 1,148 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions                |   |                     | -      |   |           |   | -      |           |   |   | 103           |   |   |        | -      |   |     |   | -       |   |   |   | - |   |   |   | 103 |   |
| Balance      at December 31, 2008                                                                               |   |                     | 9,675  |   |           | $      | 967    |           |   | $      | 51,919        |   |   | $           | -      |   |     | $      | (22,268 | )      |   | $ | 50,857 |   |   | $ | 81,475 |   |

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DYNAMICS RESEARCHCORPORATION

CONSOLIDATEDSTATEMENTS OF CASH FLOWS

|                                                                                                                                         |   | Year      Ended December 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                         |   | 2008                         |    |   | 2007 |   |   | 2006 |   |
| Cash      flows from operating activities:                                                                                                   |   |                         |    |   |   |   |   |   |   |
| Net      income (loss)                                                                                                                       |   | $                            | (1,255  | ) |   | $ | 7,102 |   |   | $ | 4,072 |   |
| Adjustments      to reconcile net cash provided by operating activities:                                                                     |   |                         |    |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                 |   |                         | 3,148   |   |   |   | 3,081 |   |   |   | 3,203 |   |
| Amortization      of intangible assets                                                                                                       |   |                         | 2,620   |   |   |   | 2,602 |   |   |   | 2,809 |   |
| Share-based      compensation, including cumulative effect of accounting    change                                                           |   |                         | 1,148   |   |   |   | 1,640 |   |   |   | 2,082 |   |
| Investment      income from equity interest                                                                                                  |   |                         | (483    | ) |   |   | (516 | ) |   |   | (223 | ) |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions, net of tax deficiencies from equity awards |   |                         | (103    | ) |   |   | (9 | ) |   |   | (161 | ) |
| Provision      for litigation                                                                                                                |   |                         | 14,819  |   |   |   | 181 |   |   |   | - |   |
| Deferred      income taxes                                                                                                                   |   |                         | (4,572  | ) |   |   | (2,972 | ) |   |   | (6,744 | ) |
| Other                                                                                                                                        |   |                         | (620    | ) |   |   | (497 | ) |   |   | (665 | ) |
| Change      in operating assets and liabilities:                                                                                             |   |                         |    |   |   |   |   |   |   |   |   |   |
| Contract      receivables, net                                                                                                               |   |                         | 1,471   |   |   |   | 714 |   |   |   | 30,260 |   |
| Prepaid      expenses and other current assets                                                                                               |   |                         | (18     | ) |   |   | 604 |   |   |   | (1,341 | ) |
| Accounts      payable                                                                                                                        |   |                         | 3,535   |   |   |   | (6,032 | ) |   |   | (7,473 | ) |
| Accrued      compensation and employee benefits                                                                                              |   |                         | (1,519  | ) |   |   | (745 | ) |   |   | (4,288 | ) |
| Other      accrued expenses                                                                                                                  |   |                         | 2,280   |   |   |   | (1,347 | ) |   |   | (2,508 | ) |
| Other      long-term liabilities                                                                                                             |   |                         | (1,696  | ) |   |   | (861 | ) |   |   | (1,439 | ) |
| Net      cash provided by operating activities                                                                                               |   |                         | 18,755  |   |   |   | 2,945 |   |   |   | 17,584 |   |
| Cash      flows from investing activities:                                                                                                   |   |                         |    |   |   |   |   |   |   |   |   |   |
| Purchase      of business, net of cash acquired                                                                                              |   |                         | (43,016 | ) |   |   | - |   |   |   | - |   |
| Additions      to property and equipment                                                                                                     |   |                         | (2,010  | ) |   |   | (1,788 | ) |   |   | (2,482 | ) |
| Proceeds      from sale of investments and long-lived assets                                                                                 |   |                         | 291     |   |   |   | 6 |   |   |   | 214 |   |
| Dividends      from equity investment                                                                                                        |   |                         | 423     |   |   |   | 180 |   |   |   | 155 |   |
| Payments      related to sale of building                                                                                                    |   |                         | (35     | ) |   |   | (980 | ) |   |   | - |   |
| Change      in other assets                                                                                                                  |   |                         | 21      |   |   |   | (170 | ) |   |   | (182 | ) |
| Net      cash used in investing activities                                                                                                   |   |                         | (44,326 | ) |   |   | (2,752 | ) |   |   | (2,295 | ) |
| Cash      flow from financing activities:                                                                                                    |   |                         |    |   |   |   |   |   |   |   |   |   |
| Borrowings      under term loan agreement                                                                                                    |   |                         | 40,000  |   |   |   | - |   |   |   | - |   |
| Repayments      under term loan agreements                                                                                                   |   |                         | (2,000  | ) |   |   | - |   |   |   | (25,412 | ) |
| Borrowings      revolving credit agreement                                                                                                   |   |                         | 69,225  |   |   |   | 201,918 |   |   |   | 172,981 |   |
| Repayments      under revolving credit agreement                                                                                             |   |                         | (76,962 | ) |   |   | (209,181 | ) |   |   | (157,981 | ) |
| Proceeds      from the exercise of stock options and employee stock purchase plan      transactions                                          |   |                         | 855     |   |   |   | 1,180 |   |   |   | 1,894 |   |
| Tax      benefit from stock options exercised and employee stock purchase plan      transactions, net of tax deficiencies from equity awards |   |                         | 103     |   |   |   | 9 |   |   |   | 161 |   |
| Payments      of deferred financing costs                                                                                                    |   |                         | (545    | ) |   |   | - |   |   |   | (65 | ) |
| Net      cash provided by (used in) financing activities                                                                                     |   |                         | 30,676  |   |   |   | (6,074 | ) |   |   | (8,422 | ) |
| Net      decrease in cash and cash equivalents                                                                                               |   |                         | 5,105   |   |   |   | (5,881 | ) |   |   | 6,867 |   |
| Cash      and cash equivalents, beginning of period                                                                                          |   |                         | 2,006   |   |   |   | 7,887 |   |   |   | 1,020 |   |
| Cash      and cash equivalents, end of period                                                                                                |   | $                            | 7,111   |   |   | $ | 2,006 |   |   | $ | 7,887 |   |
|                                                                                                                                         |   |                         |    |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                                                                                       |   |                         |    |   |   |   |   |   |   |   |   |   |
| Cash      paid during the year for interest                                                                                                  |   | $                            | 973     |   |   | $ | 1,494 |   |   | $ | 2,078 |   |
| Cash      paid during the year for income taxes, net of refunds                                                                              |   | $                            | 2,399   |   |   | $ | 6,206 |   |   | $ | 12,486 |   |
| Supplemental      disclosure of noncash financing and investing activities:                                                                  |   |                         |    |   |   |   |   |   |   |   |   |   |
| Issuance      of restricted stock                                                                                                            |   | $                            | 869     |   |   | $ | 1,135 |   |   | $ | 1,000 |   |
| Increase      (decrease) in pension liability                                                                                                |   | $                            | 24,682  |   |   | $ | (3,899 | ) |   | $ | (2,588 | ) |
| Change      in fair value of derivatives                                                                                                     |   | $                            | 860     |   |   | $ | - |   |   | $ | - |   |
| Accrual      of earnout on purchase of business                                                                                              |   | $                            | 4,250   |   |   | $ | - |   |   | $ | - |   |

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 NOTE 1. NATUREOF OPERATIONS

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| • |   | Level      1 — Quoted prices for identical instruments in active    markets.                                                                                                                                                                              |
|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                                                                                                                                                            |
| • |   | Level      2 — Quoted prices for similar instruments in active markets; quoted prices      for identical or similar instruments in markets that are not active; and      model-derived valuations in which significant value drivers are      observable. |
|    |   |                                                                                                                                                                                                                                                            |
| • |   | Level      3 — Valuations derived from valuation techniques in which significant      value drivers are unobservable.                                                                                                                                     |

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| Cash      consideration at purchase date   |   | $      | 44,960 |   |
|--------------------------------------------|--------|--------|--------|--------|
| Additional      earnout cash consideration |   |   | 5,000  |   |
| Transaction      costs                     |   |   | 408    |   |
| Purchase      price                        |   |   | 50,368 |   |
| Cash      acquired                         |   |   | (3,102 | )      |
| Purchase      price, net of cash acquired  |   | $      | 47,266 |   |

| Current      assets, net of cash acquired       |   | $      | 9,638  |   |   |              |   |
|-------------------------------------------------|--------|--------|--------|--------|--------|-------------------|--------|
| Property      and equipment                     |   |   | 316    |   |   |              |   |
| Current      liabilities                        |   |   | (4,200 | )      |   |              |   |
| Long-term      liabilities                      |   |   | (4     | )      |   |              |   |
| Goodwill      and other intangible assets       |   |   | 41,516 |   |   |              |   |
| Total      purchase price allocation            |   | $      | 47,266 |   |   |              |   |
|                                            |   |   |   |   |   | amortization      |   |
|                                            |   |   |   |   |   | life      (years) |   |
| Customer      contracts                         |   | $      | 3,500  |   |   |              | 5      |   |
| Customer      relationships                     |   |   | 1,900  |   |   |              | 6      |   |
| Non-compete      agreement                      |   |   | 1,400  |   |   |              | 3      |   |
| 8(a)      contract transition                   |   |   | 130    |   |   |              | 1      |   |
| Goodwill                                        |   |   | 34,586 |   |   |              | -      |   |
| Total      goodwill and other intangible assets |   | $      | 41,516 |   |   |              |   |   |

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|                            |   | Year      Ended December 31, |    |
|---------------------------------|--------|------------------------------|---------|
|                            |   | 2008                         |    |   | 2007 |   |
|                            |   | (unaudited)                  |    |
| Revenue                         |   | $                            | 267,586 |   |   | $ | 252,548 |   |
| Gross      profit               |   | $                            | 48,288  |   |   | $ | 45,929 |   |
| Operating      income           |   | $                            | 3,807   |   |   | $ | 14,310 |   |
| Net      income (loss)          |   | $                            | (196    | ) |   | $ | 6,848 |   |
|                            |   |                         |    |   |   |   |   |   |
| Earnings      (loss) per share: |   |                         |    |   |   |   |   |   |
| Basic                           |   | $                            | (0.02   | ) |   | $ | 0.73 |   |
| Diluted                         |   | $                            | (0.02   | ) |   | $ | 0.71 |   |

|                                                                                                                       |   | December      31, |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                                                       |   | 2008              |    |   | 2007 |   |
| Contract      receivables, net                                                                                             |   |              |    |   |   |   |
| Billed      receivables                                                                                                    |   | $                 | 35,423  |   |   | $ | 31,884 |   |
| Unbilled      receivables(1):                                                                                              |   |              |    |   |   |   |   |   |
| Revenues      recorded in excess of milestone billings on fixed price contracts with the      States of Ohio and Tennessee |   |              | 8,907   |   |   |   | 7,572 |   |
| Retainages      and fee withholdings                                                                                       |   |              | 1,179   |   |   |   | 1,529 |   |
| Other      unbilled receivables                                                                                            |   |              | 26,858  |   |   |   | 23,488 |   |
| Total      unbilled receivables                                                                                            |   |              | 36,944  |   |   |   | 32,589 |   |
| Allowance      for doubtful accounts                                                                                       |   |              | (929    | ) |   |   | (903 | ) |
| Contract      receivables, net                                                                                             |   | $                 | 71,438  |   |   | $ | 63,570 |   |
|                                                                                                                       |   |              |    |   |   |   |   |   |
| Prepaid      expenses and other current assets:                                                                            |   |              |    |   |   |   |   |   |
| Inventory                                                                                                                  |   | $                 | 766     |   |   | $ | 584 |   |
| Restricted      cash                                                                                                       |   |              | 150     |   |   |   | - |   |
| Investments      available for sale                                                                                        |   |              | -       |   |   |   | 334 |   |
| Other                                                                                                                      |   |              | 1,575   |   |   |   | 1,590 |   |
| Prepaid      expenses and other current assets                                                                             |   | $                 | 2,491   |   |   | $ | 2,508 |   |
|                                                                                                                       |   |              |    |   |   |   |   |   |
| Property      and equipment, net:                                                                                          |   |              |    |   |   |   |   |   |
| Production      equipment                                                                                                  |   | $                 | 11,530  |   |   | $ | 11,917 |   |
| Software                                                                                                                   |   |              | 11,602  |   |   |   | 11,052 |   |
| Furniture      and other equipment                                                                                         |   |              | 7,644   |   |   |   | 6,862 |   |
| Leasehold      improvements                                                                                                |   |              | 2,949   |   |   |   | 2,375 |   |
| Property      and equipment                                                                                                |   |              | 33,725  |   |   |   | 32,206 |   |
| Less      accumulated depreciation                                                                                         |   |              | (24,376 | ) |   |   | (22,024 | ) |
| Property      and equipment, net                                                                                           |   | $                 | 9,349   |   |   | $ | 10,182 |   |
|                                                                                                                       |   |              |    |   |   |   |   |   |
| Other      noncurrent assets:                                                                                              |   |              |    |   |   |   |   |   |
| Equity      investments                                                                                                    |   | $                 | 1,180   |   |   | $ | 1,119 |   |
| Deferred      compensation plan investments                                                                                |   |              | 1,107   |   |   |   | 1,747 |   |
| Prepaid      pension asset                                                                                                 |   |              | -       |   |   |   | 718 |   |
| Other                                                                                                                      |   |              | 838     |   |   |   | 495 |   |
| Other      noncurrent assets                                                                                               |   | $                 | 3,125   |   |   | $ | 4,079 |   |

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|                                                   |   | December      31, |   |
|--------------------------------------------------------|--------|-------------------|--------|
|                                                   |   | 2008              |   |   | 2007 |   |
| Accrued      compensation and employee benefits:       |   |              |   |   |   |   |
| Accrued      compensation and related  taxes |   | $                 | 7,504  |   |   | $ | 6,967 |   |
| Accrued      vacation                                  |   |              | 4,391  |   |   |   | 4,273 |   |
| Other                                                  |   |              | 1,749  |   |   |   | 2,169 |   |
| Accrued      compensation and employee benefits        |   | $                 | 13,644 |   |   | $ | 13,409 |   |
|                                                   |   |              |   |   |   |   |   |   |
| Other      accrued expenses:                           |   |              |   |   |   |   |   |   |
| Accrued      litigation reserve                        |   | $                 | 15,000 |   |   | $ | 181 |   |
| Accrued      acquisition costs                         |   |              | 4,265  |   |   |   | - |   |
| Accrued      income taxes                              |   |              | 2,042  |   |   |   | 585 |   |
| Deferred      gain on sale of building                 |   |              | 676    |   |   |   | 676 |   |
| Other                                                  |   |              | 2,777  |   |   |   | 1,636 |   |
| Other      accrued expenses                            |   | $                 | 24,760 |   |   | $ | 3,078 |   |
|                                                   |   |              |   |   |   |   |   |   |
| Other      long-term liabilities:                      |   |              |   |   |   |   |   |   |
| Accrued      pension liability                         |   | $                 | 22,570 |   |   | $ | - |   |
| Deferred      gain on sale of building                 |   |              | 4,057  |   |   |   | 4,733 |   |
| Deferred      compensation plan liability              |   |              | 1,107  |   |   |   | 1,747 |   |
| Other                                                  |   |              | 2,552  |   |   |   | 2,096 |   |
| Other      long-term liabilities                       |   | $                 | 30,286 |   |   | $ | 8,576 |   |

| (1) | At      December 31, 2008 and 2007, $495 and $553, respectively, of unbilled      retainages and fee withholdings are not anticipated to be billed within      twelve months.  Additionally, at December 31, 2008, $4,557 of      the unbilled balance under the Company’s contract with the State of      Tennessee is not scheduled to be invoiced within one  year. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                            |   | December      31, 2008 |   |   | December 31,      2007 |   |
|---------------------------------|--------|------------------------|--------|--------|-----------------------------|--------|
|                            |   |                   |   |   | Accumulated                 |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                            |   | Cost                   |   |   | Amortization                |   |   | Net |   |   | Cost |   |   | Amortization |   |   | Net |   |
| Customer      relationships     |   | $                      | 14,700 |   |                        | $      | (11,769 | ) |   | $ | 2,931 |   |   | $ | 12,800 |   |   | $ | (9,731 | ) |   | $ | 3,069 |   |
| Customer      contracts         |   |                   | 3,500  |   |                        |   | (522 | ) |   |   | 2,978 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Non-competition      agreements |   |                   | 1,400  |   |                        |   | - |   |   |   | 1,400 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| 8(a)      contract transition   |   |                   | 130    |   |                        |   | (60 | ) |   |   | 70 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                           |   | $                      | 19,730 |   |                        | $      | (12,351 | ) |   | $ | 7,379 |   |   | $ | 12,800 |   |   | $ | (9,731 | ) |   | $ | 3,069 |   |

| Year      ending December 31: |   |   |   |
|-------------------------------|--------|--------|--------|
| 2009                          |   | $      | 3,305  |   |
| 2010                          |   | $      | 1,542  |   |
| 2011                          |   | $      | 1,188  |   |
| 2012                          |   | $      | 492    |   |
| 2013                          |   | $      | 349    |   |
| 2014      and thereafter      |   | $      | 503    |   |

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|                                                                                                                                            |   | Year      ended December 31, |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                                            |   | 2008                              |    |   | 2007 |   |   | 2006 |   |
| Income      (loss) from operations                                                                                                              |   | $                                 | (704    | ) |   | $ | 4,682 |   |   | $ | 2,730 |   |
| Cumulative      benefit of accounting change                                                                                                    |   |                              | -       |   |   |   | - |   |   |   | 62 |   |
| Stockholders’      equity for compensation expense for tax purposes in excess of amounts      recognized for financial reporting purposes |   |                              | (103    | ) |   |   | (77 | ) |   |   | (161 | ) |
| Other      comprehensive income (loss)                                                                                                          |   |                              | (10,198 | ) |   |   | 1,617 |   |   |   | 1,026 |   |
|                                                                                                                                            |   | $                                 | (11,005 | ) |   | $ | 6,222 |   |   | $ | 3,657 |   |

|                                            |   | Year      ended December 31, |   |
|-------------------------------------------------|--------|-----------------------------------|--------|
|                                            |   | 2008                              |   |   | 2007 |   |   | 2006 |   |
| Currently      payable                          |   |                              |   |   |   |   |   |   |   |
| Federal                                         |   | $                                 | 3,353  |   |   | $ | 6,623 |   |   | $ | 8,041 |   |
| State                                           |   |                              | 515    |   |   |   | 1,031 |   |   |   | 1,433 |   |
| Total      currently payable                    |   |                              | 3,868  |   |   |   | 7,654 |   |   |   | 9,474 |   |
| Deferred                                        |   |                              |   |   |   |   |   |   |   |   |   |   |
| Federal                                         |   |                              | (3,690 | ) |   |   | (2,490 | ) |   |   | (5,174 | ) |
| State                                           |   |                              | (882   | ) |   |   | (482 | ) |   |   | (1,570 | ) |
| Total      deferred                             |   |                              | (4,572 | ) |   |   | (2,972 | ) |   |   | (6,744 | ) |
|  Provision      (benefit) for income taxes |   | $                                 | (704   | ) |   | $ | 4,682 |   |   | $ | 2,730 |   |

|                                                |   | Year      ended December 31, |   |
|-----------------------------------------------------|--------|-----------------------------------|--------|
|                                                |   | 2008                              |   |   | 2007 |   |   | 2006 |   |
| Provision      (benefit) at statutory rate          |   | $                                 | (686   | ) |   |   | (35.0 | )% |   | $ | 4,124 |   |   |   | 35.0 | % |   | $ | 2,351 |   |   |   | 35.0 | % |
| State      income taxes, net of federal tax benefit |   |                              | (147   | ) |   |   | (7.5 | ) |   |   | 512 |   |   |   | 4.3 |   |   |   | 355 |   |   |   | 5.3 |   |
| Permanent      differences, net                     |   |                              | 141    |   |   |   | 7.2 |   |   |   | 166 |   |   |   | 1.4 |   |   |   | 177 |   |   |   | 2.6 |   |
| SFAS      123(R) expense                            |   |                              | 71     |   |   |   | 3.6 |   |   |   | 73 |   |   |   | 0.6 |   |   |   | 166 |   |   |   | 2.5 |   |
| Change      in deferred tax rate                    |   |                              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 186 |   |   |   | 2.8 |   |
| Adjustments      to tax accruals and reserves       |   |                              | (196   | ) |   |   | (10.0 | ) |   |   | (201 | ) |   |   | (1.7 | ) |   |   | (266 | ) |   |   | (4.0 | ) |
| Tax      credits and state audits                   |   |                              | 12     |   |   |   | 0.6 |   |   |   | (82 | ) |   |   | (0.7 | ) |   |   | (226 | ) |   |   | (3.4 | ) |
| Other,      net                                     |   |                              | 101    |   |   |   | 5.2 |   |   |   | 90 |   |   |   | 0.8 |   |   |   | (13 | ) |   |   | (0.2 | ) |
| Provision      (benefit) for income taxes           |   | $                                 | (704   | ) |   |   | (35.9 | )% |   | $ | 4,682 |   |   |   | 39.7 | % |   | $ | 2,730 |   |   |   | 40.6 | % |

|                                   |   | December 31, |   |
|----------------------------------------|--------|-------------------|--------|
|                                   |   | 2008              |   |   | 2007 |   |
| Pension      liability                 |   | $                 | 14,250 |   |   | $ | 4,465 |   |
| Deferred      gain on sale of building |   |              | 2,163  |   |   |   | 2,680 |   |
| Accrued      vacation                  |   |              | 1,050  |   |   |   | 1,152 |   |
| Accrued      expenses                  |   |              | 7,126  |   |   |   | 1,050 |   |
| Employee      share-based compensation |   |              | 700    |   |   |   | 903 |   |
| Receivables      reserves              |   |              | 392    |   |   |   | 477 |   |
| Other                                  |   |              | 200    |   |   |   | 5 |   |
| Deferred      tax assets               |   |              | 25,881 |   |   |   | 10,732 |   |

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|                                          |   | December 31, |    |
|-----------------------------------------------|--------|-------------------|---------|
|                                          |   | 2008              |    |   | 2007 |   |
| Unbilled      receivables                     |   |              | (6,911  | ) |   |   | (7,476 | ) |
| Pension      funding                          |   |              | (5,302  | ) |   |   | (4,749 | ) |
| Fixed      assets and intangibles             |   |              | (3,814  | ) |   |   | (3,348 | ) |
| Domestic      International Sales Corporation |   |              | (2,119  | ) |   |   | (1,973 | ) |
| Investment      available for sale            |   |              | -       |   |   |   | (132 | ) |
| Other                                         |   |              | (9      | ) |   |   | (56 | ) |
| Deferred      tax liability                   |   |              | (18,155 | ) |   |   | (17,734 | ) |
| Deferred      tax asset (liability), net      |   | $                 | 7,726   |   |   | $ | (7,002 | ) |

| Balance      at January 1, 2007                |   | $      | 291 |   |
|------------------------------------------------|--------|--------|-----|--------|
| Additions      for current year tax positions  |   |   | 237 |   |
| Reductions      for prior year tax positions   |   |   | (9  | )      |
| Lapse      of statute of limitations           |   |   | (2  | )      |
| Balance      at December 31, 2007              |   |   | 517 |   |
| Reductions      for current year tax positions |   |   | (87 | )      |
| Balance      at December 31, 2008              |   | $      | 430 |   |

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|   | • |   | Any      failure by the Company and its subsidiaries to make any payment of      principal, interest and other sums due under the facility within three      calendar days of the date when such payment is due; |   |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |
|   | • |   | Any      breach by the Company or any of its subsidiaries of certain covenants,      representations and warranties;                                                                                             |   |
|   |
|   | • |   | Any      default and acceleration of any indebtedness owed by the Company or any of      its subsidiaries to any person (other than the bank group) which is in      excess of $1.0 million;                     |   |
|   |
|   | • |   | Any      final judgment against the Company or any of its subsidiaries in excess of      $1.0 million which has not been insured to the reasonable satisfaction of      Brown Brothers as administrative agent;  |   |
|   | • |   | Any      bankruptcy (voluntary or involuntary) of the Company or any of its      subsidiaries;                                                                                                                   |   |
|   |
|   | • |   | Any      material adverse change in the business or financial condition of the      Company and its subsidiaries; or                                                                                             |   |
|   |
|   | • |   | Any      change in control of the Company.                                                                                                                                                                       |   |

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|                                    |   | Year      ended December 31, |   |
|-----------------------------------------|--------|-----------------------------------|--------|
|                                    |   | 2008                              |   |   | 2007 |   |   | 2006 |   |
| Interest      cost                      |   | $                                 | 4,103  |   |   | $ | 3,955 |   |   | $ | 3,995 |   |
| Expected      return on plan assets     |   |                              | (5,975 | ) |   |   | (5,811 | ) |   |   | (5,117 | ) |
| Recognized      actuarial loss          |   |                              | 586    |   |   |   | 1,104 |   |   |   | 1,717 |   |
| Net      periodic pension cost (income) |   | $                                 | (1,286 | ) |   | $ | (752 | ) |   | $ | 595 |   |

|                                         |   | December      31, |   |
|----------------------------------------------|--------|-------------------|--------|
|                                         |   | 2008              |   |   | 2007 |   |
| Change      in benefit obligation            |   |              |   |   |   |   |
| Benefit      obligation at beginning of year |   | $                 | 67,342 |   |   | $ | 70,006 |   |
| Interest      cost                           |   |              | 4,444  |   |   |   | 3,955 |   |
| Benefits      paid                           |   |              | (3,516 | ) |   |   | (2,760 | ) |
| Actuarial      (gain) loss                   |   |              | 1,421  |   |   |   | (3,859 | ) |
| Benefit      obligation at end of year       |   |              | 69,691 |   |   |   | 67,342 |   |

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|                                                |   | December      31, |    |
|-----------------------------------------------------|--------|-------------------|---------|
|                                                |   | 2008              |    |   | 2007 |   |
| Change      in plan assets                          |   |              |    |   |   |   |
| Fair      value of plan assets at beginning of year |   |              | 68,060  |   |   |   | 66,073 |   |
| Actual      return on plan assets                   |   |              | (17,423 | ) |   |   | 4,747 |   |
| Benefits      paid                                  |   |              | (3,516  | ) |   |   | (2,760 | ) |
| Fair      value of plan assets at end of year       |   |              | 47,121  |   |   |   | 68,060 |   |
| Funded      status                                  |   | $                 | (22,570 | ) |   | $ | 718 |   |

|                             |   | December      31, |   |
|----------------------------------|--------|-------------------|--------|
|                             |   | 2008              |   |   | 2007 |   |
| Other      noncurrent assets     |   | $                 | -      |   |   | $ | 718 |   |
| Other      long-term liabilities |   |              | 22,570 |   |   |   | - |   |
| Net      amount recognized       |   | $                 | 22,570 |   |   | $ | 718 |   |

|   |   | Beginning |   |   |         |   |   | Experience  |   |   | Effect      of |   |   | Ending  |   |
|--------|--------|-----------|--------|--------|--------------|--------|--------|-------------|--------|--------|----------------|--------|--------|---------|--------|
|   |   | Balance   |   |   | Amortization |   |   | Loss/(Gain) |   |   | Curtailment    |   |   | Balance |   |
| 2008   |   | $         | 11,260 |   |         | $      | (635   | )           |   | $      | 25,317         |   |   | $       | -      |   |   | $ | 35,942 |   |
| 2007   |   | $         | 15,159 |   |         | $      | (1,104 | )           |   | $      | (2,795         | )      |   | $       | -      |   |   | $ | 11,260 |   |
| 2006   |   | $         | 21,102 |   |         | $      | (1,717 | )           |   | $      | (1,214         | )      |   | $       | (3,012 | ) |   | $ | 15,159 |   |

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|                                              |   | December      31,                 |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
|                                              |   | 2008                              |   |   | 2007 |   |
| Used      to determine benefit obligations        |   |                              |   |   |   |   |
| Discount      rate                                |   |                              | 6.25   | % |   |   | 6.25 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |
|                                              |   |
|                                              |   | Year      Ended December 31, |   |
|                                              |   | 2008                              |   |   | 2007 |   |   | 2006 |   |
| Used      to determine net periodic benefit costs |   |                              |   |   |   |   |   |   |   |   |   |
| Discount      rate                                |   |                              | 6.25   | % |   |   | 5.75 | % |   |   | 5.75 | % |
| Expected      rate of return on assets            |   |                              | 9.00   | % |   |   | 9.00 | % |   |   | 9.00 | % |
| Rate      of compensation increase                |   |                              | N/A    |   |   |   | N/A |   |   |   | N/A |   |

|                   |   | Target     |   |   | December      31, |   |
|------------------------|--------|------------|--------|--------|-------------------|--------|
|                   |   | Allocation |   |   | 2008              |   |   | 2007 |   |
| Equity      securities |   |       | 60     | %      |              |   | 56 | % |   |   | 64 | % |
| Debt      securities   |   |       | 38     |   |              |   | 37 |   |   |   | 31 |   |
| Other                  |   |       | 2      |   |              |   | 7 |   |   |   | 5 |   |
|                   |   |       | 100    | %      |              |   | 100 | % |   |   | 100 | % |

| Year      ending December 31:                                   |   |   |   |
|-----------------------------------------------------------------|--------|--------|--------|
| 2009                                                            |   | $      | 3,525  |   |
| 2010                                                            |   | $      | 3,703  |   |
| 2011                                                            |   | $      | 3,934  |   |
| 2012                                                            |   | $      | 4,238  |   |
| 2013                                                            |   | $      | 4,493  |   |
| Five      subsequent fiscal years ending December 31, 2018 |   | $      | 24,749 |   |

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|                                        |   | Year      ended December 31, |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | 2008                         |   |   | 2007 |   |   | 2006 |   |
| Cost      of products and services          |   | $                            | 483    |   |   | $ | 605 |   |   | $ | 1,065 |   |
| Selling,      general and administrative    |   |                         | 665    |   |   |   | 1,035 |   |   |   | 1,163 |   |
| Cumulative      effect of accounting change |   |                         | -      |   |   |   | - |   |   |   | (146 | ) |
| Total      share-based compensation expense |   | $                            | 1,148  |   |   | $ | 1,640 |   |   | $ | 2,082 |   |

|                                                  |   |           |      |   |     |   |   | Weighted        |   |   |      |   |
|-------------------------------------------------------|--------|----------------|-----------|--------|----------|--------|--------|-----------------|--------|--------|-----------|--------|
|                                                  |   |           |      |   |     |   |   | Average         |   |   |      |   |
|                                                  |   |           |      |   | Weighted |   |   | Remaining       |   |   |      |   |
|                                                  |   |           |      |   | Average  |   |   | Contractual     |   |   | Aggregate |   |
|                                                  |   | Number      of |      |   | Exercise |   |   | Term            |   |   | Intrinsic |   |
|                                                  |   | Shares         |      |   | Price    |   |   | (in      years) |   |   | Value     |   |
| Outstanding      at December 31, 2007                 |   |           | 1,012,078 |   |     | $      | 8.34   |            |   |   | 3.0       |   |   | $ | 3,030 |   |
| Granted                                               |   |           | -         |   |     | $      | -      |            |   |   |      |   |   |   |   |   |
| Exercised                                             |   |           | (81,117   | )      |     | $      | 5.53   |            |   |   |      |   |   |   |   |   |
| Cancelled                                             |   |           | (41,853   | )      |     | $      | 12.15  |            |   |   |      |   |   |   |   |   |
| Outstanding      and exercisable at December 31, 2008 |   |           | 889,108   |   |     | $      | 8.42   |            |   |   | 2.1       |   |   | $ | 729 |   |

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|                                                           |   | Year      ended December 31, |   |
|----------------------------------------------------------------|--------|------------------------------|--------|
|                                                           |   | 2008                         |   |   | 2007 |   |   | 2006 |   |
| Amounts      realized or received from stock option exercises: |   |                         |   |   |   |   |   |   |   |
| Cash      proceeds received                                    |   | $                            | 449    |   |   | $ | 558 |   |   | $ | 351 |   |
| Intrinsic      value realized                                  |   | $                            | 267    |   |   | $ | 279 |   |   | $ | 384 |   |
| Income      tax benefit realized                               |   | $                            | 101    |   |   | $ | 70 |   |   | $ | 134 |   |

|                                |   |           |     |   | Weighted        |   |
|-------------------------------------|--------|----------------|----------|--------|-----------------|--------|
|                                |   |           |     |   | Average         |   |
|                                |   | Number      of |     |   | Grant-Date      |   |
|                                |   | Shares         |     |   | Fair      Value |   |
| Nonvested      at December 31, 2007 |   |           | 223,330  |   |            | $      | 11.43 |   |
| Granted                             |   |           | 92,000   |   |            | $      | 9.45 |   |
| Vested                              |   |           | (143,437 | )      |            | $      | 11.06 |   |
| Cancelled                           |   |           | (13,417  | )      |            | $      | 11.63 |   |
| Nonvested      at December 31, 2008 |   |           | 158,476  |   |            | $      | 10.61 |   |

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|                                                                                  |   | Before |    |   | Tax       |   |   | Net      of |   |
|---------------------------------------------------------------------------------------|--------|--------|---------|--------|-----------|--------|--------|-------------|--------|
|                                                                                  |   | Tax    |    |   | (Expense) |   |   | Tax         |   |
|                                                                                  |   | Amount |    |   | Benefit   |   |   | Amount      |   |
| Year      ended December 31, 2006                                                     |   |   |    |   |      |   |   |        |   |
| Minimum      pension liability adjustment                                             |   | $      | 2,588   |   |      | $      | (1,026 | )           |   | $ | 1,562 |   |
| Unrealized      gains on investments:                                                 |   |   |    |   |      |   |   |        |   |   |   |   |
| Unrealized      holding gains arising during the period                               |   |   | 211     |   |      |   | (89    | )           |   |   | 122 |   |
| Less:      reclassification adjustment for gains realized in net    income            |   |   | (211    | )      |      |   | 89     |        |   |   | (122 | ) |
| Net      unrealized gains                                                             |   |   | -       |   |      |   | -      |        |   |   | - |   |
| Other      comprehensive income                                                       |   | $      | 2,588   |   |      | $      | (1,026 | )           |   | $ | 1,562 |   |
|                                                                                  |   |   |    |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2007                                                     |   |   |    |   |      |   |   |        |   |   |   |   |
| Minimum      pension liability adjustment                                             |   | $      | 3,899   |   |      | $      | (1,546 | )           |   | $ | 2,353 |   |
| Unrealized      holding gains arising during the period                               |   |   | 179     |   |      |   | (71    | )           |   |   | 108 |   |
| Other      comprehensive income                                                       |   | $      | 4,078   |   |      | $      | (1,617 | )           |   | $ | 2,461 |   |
|                                                                                  |   |   |    |   |      |   |   |        |   |   |   |   |
| Year      ended December 31, 2008                                                     |   |   |    |   |      |   |   |        |   |   |   |   |
| Pension      liability adjustment                                                     |   | $      | (25,268 | )      |      | $      | 10,018 |        |   | $ | (15,250 | ) |
| Less:      reclassification adjustment for costs realized in net loss                 |   |   | 586     |   |      |   | (232   | )           |   |   | 354 |   |
| Net      pension liability adjustment                                                 |   |   | (24,682 | )      |      |   | 9,786  |        |   |   | (14,896 | ) |
| Unrealized      holding loss on derivative instruments arising during the      period |   |   | (860    | )      |      |   | 341    |        |   |   | (519 | ) |
| Reclassification      adjustment for gains on investments realized in net loss        |   |   | (179    | )      |      |   | 71     |        |   |   | (108 | ) |
| Other      comprehensive loss                                                         |   | $      | (25,721 | )      |      | $      | 10,198 |        |   | $ | (15,523 | ) |

|                                                                    |   | Year      Ended December 31, |      |
|-------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                    |   | 2008                              |      |   | 2007 |   |   | 2006 |   |
|  Weighted      average shares outstanding - Basic                  |   |                              | 9,493,495 |   |   |   | 9,326,907 |   |   |   | 9,099,897 |   |
|  Dilutive      effect of stock options and restricted stock grants |   |                              | -         |   |   |   | 322,990 |   |   |   | 326,638 |   |
|  Weighted      average shares outstanding - Diluted                |   |                              | 9,493,495 |   |   |   | 9,649,897 |   |   |   | 9,426,535 |   |

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|                                         |   | Year      ended December 31, |    |
|----------------------------------------------|--------|-----------------------------------|---------|
|                                         |   | 2008                              |    |   | 2007 |   |   | 2006 |   |
| Revenues      from external customers        |   |                              |    |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 236,796 |   |   | $ | 224,676 |   |   | $ | 252,890 |   |
| Metrigraphics                                |   |                              | 6,028   |   |   |   | 4,901 |   |   |   | 6,097 |   |
|                                         |   | $                                 | 242,824 |   |   | $ | 229,577 |   |   | $ | 258,987 |   |
| Gross      margin                            |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 38,994  |   |   | $ | 37,160 |   |   | $ | 33,914 |   |
| Metrigraphics                                |   |                              | 170     |   |   |   | (53 | ) |   |   | 1,202 |   |
|                                         |   | $                                 | 39,164  |   |   | $ | 37,107 |   |   | $ | 35,116 |   |
| Operating      income (loss)                 |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 408     |   |   | $ | 13,826 |   |   | $ | 8,066 |   |
| Metrigraphics                                |   |                              | (979    | ) |   |   | (1,147 | ) |   |   | 105 |   |
|                                         |   | $                                 | (571    | ) |   | $ | 12,679 |   |   | $ | 8,171 |   |
| Depreciation      and amortization           |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 4,731   |   |   | $ | 4,755 |   |   | $ | 5,385 |   |
| Metrigraphics                                |   |                              | 187     |   |   |   | 212 |   |   |   | 365 |   |
| Segment      depreciation and amortization   |   |                              | 4,918   |   |   |   | 4,967 |   |   |   | 5,750 |   |
| Corporate      depreciation and amortization |   |                              | 850     |   |   |   | 716 |   |   |   | 262 |   |
|                                         |   | $                                 | 5,768   |   |   | $ | 5,683 |   |   | $ | 6,012 |   |
| Capital      expenditures                    |   |                              |    |   |   |   |   |   |   |   |   |   |
| Systems      and Services                    |   | $                                 | 1,954   |   |   | $ | 1,267 |   |   | $ | 2,243 |   |
| Metrigraphics                                |   |                              | 37      |   |   |   | 112 |   |   |   | 17 |   |
| Segment      capital expenditures            |   |                              | 1,991   |   |   |   | 1,379 |   |   |   | 2,260 |   |
| Corporate      capital expenditures          |   |                              | 19      |   |   |   | 409 |   |   |   | 222 |   |
|                                         |   | $                                 | 2,010   |   |   | $ | 1,788 |   |   | $ | 2,482 |   |

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|                      |   | December 31, |    |
|---------------------------|--------|-------------------|---------|
|                      |   | 2008              |    |   | 2007 |   |
| Segment      assets       |   |              |    |   |   |   |
| Systems      and Services |   | $                 | 184,032 |   |   | $ | 136,541 |   |
| Metrigraphics             |   |              | 1,922   |   |   |   | 2,229 |   |
| Total      segment assets |   |              | 185,954 |   |   |   | 138,770 |   |
| Corporate      assets     |   |              | 22,976  |   |   |   | 11,183 |   |
|                      |   | $                 | 208,930 |   |   | $ | 149,953 |   |

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|                        |   | December 31, |   |
|-----------------------------|--------|-------------------|--------|
|                        |   | 2008              |   |   | 2007 |   |
| Contract      receivables   |   | $                 | 785    |   |   | $ | 4,486 |   |
| Other      receivables, net |   | $                 | -      |   |   | $ | 314 |   |

|                          |   | Lease      |   |   | Sublease |   |
|-------------------------------|--------|------------|--------|--------|----------|--------|
|                          |   | Commitment |   |   | Income   |   |
| Year      ending December 31: |   |       |   |   |     |   |
| 2009                          |   | $          | 7,074  |   |     | $      | 1,617 |   |
| 2010                          |   |       | 6,237  |   |     |   | 1,481 |   |
| 2011                          |   |       | 3,544  |   |     |   | 642 |   |
| 2012                          |   |       | 2,654  |   |     |   | - |   |
| 2013                          |   |       | 2,577  |   |     |   | - |   |
| 2014      and thereafter      |   |       | 4,850  |   |     |   | - |   |
|                          |   | $          | 26,936 |   |     | $      | 3,740 |   |

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|                                            |   | First   |   |   | Second  |   |   | Third   |   |   | Fourth  |   |   | Fiscal |   |
|-------------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
|                                            |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Quarter |   |   | Year   |   |
| 2008                                            |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |
| Revenues                                        |   | $       | 56,478 |   |    | $      | 55,293 |    |   | $      | 63,491  |   |   | $      | 67,562 |   |   | $ | 242,824 |   |
| Cost      of contract revenue and product sales |   | $       | 47,817 |   |    | $      | 46,992 |    |   | $      | 53,527  |   |   | $      | 55,324 |   |   | $ | 203,660 |   |
| Gross      profit                               |   | $       | 8,661  |   |    | $      | 8,301  |    |   | $      | 9,964   |   |   | $      | 12,238 |   |   | $ | 39,164 |   |
| Operating      income (loss)(1)                 |   | $       | (6,068 | )      |    | $      | 2,644  |    |   | $      | (2,283  | )      |   | $      | 5,136  |   |   | $ | (571 | ) |
| Net      income (loss)                          |   | $       | (5,256 | )      |    | $      | 1,629  |    |   | $      | (232    | )      |   | $      | 2,604  |   |   | $ | (1,255 | ) |
| Earnings      (loss) per share:                 |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic(2)                                        |   | $       | (0.56  | )      |    | $      | 0.17   |    |   | $      | (0.02   | )      |   | $      | 0.27   |   |   | $ | (0.13 | ) |
| Diluted(2)                                      |   | $       | (0.56  | )      |    | $      | 0.17   |    |   | $      | (0.02   | )      |   | $      | 0.27   |   |   | $ | (0.13 | ) |
| 2007                                            |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues                                        |   | $       | 56,780 |   |    | $      | 58,010 |    |   | $      | 58,328  |   |   | $      | 56,459 |   |   | $ | 229,577 |   |
| Cost      of contract revenue and product sales |   | $       | 48,081 |   |    | $      | 48,660 |    |   | $      | 49,020  |   |   | $      | 46,709 |   |   | $ | 192,470 |   |
| Gross      profit                               |   | $       | 8,699  |   |    | $      | 9,350  |    |   | $      | 9,308   |   |   | $      | 9,750  |   |   | $ | 37,107 |   |
| Operating      income                           |   | $       | 2,270  |   |    | $      | 2,936  |    |   | $      | 3,396   |   |   | $      | 3,896  |   |   | $ | 12,498 |   |
| Net      income                                 |   | $       | 1,123  |   |    | $      | 1,514  |    |   | $      | 1,919   |   |   | $      | 2,546  |   |   | $ | 7,102 |   |
| Earnings      per share:                        |   |    |   |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |   |
| Basic(2)                                        |   | $       | 0.12   |   |    | $      | 0.16   |    |   | $      | 0.21    |   |   | $      | 0.27   |   |   | $ | 0.76 |   |
| Diluted(2)                                      |   | $       | 0.12   |   |    | $      | 0.16   |    |   | $      | 0.20    |   |   | $      | 0.26   |   |   | $ | 0.74 |   |

| (1)       | Operating      income includes a provision for litigation of $8,819 and $6,000 in the      first quarter and third quarter of 2008, respectively.                                                                          |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                       |
| (2)  | Basic      and diluted earnings per share is computed independently for each of the      quarters presented; accordingly, the sum of the quarterly earnings per      share may not equal the total computed for the  year. |

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DYNAMICS RESEARCHCORPORATION

|                                 |   |            |   |   | Additions       |   |   |            |   |   |       |   |
|--------------------------------------|--------|-----------------|--------|--------|-----------------|--------|--------|-----------------|--------|--------|------------|--------|
|                                 |   | Balance      at |   |   | Charged      to |   |   | Charged      to |   |   | Deductions |   |   | Balance      at |   |
|                                 |   | Beginning       |   |   | Costs      and  |   |   | Other           |   |   | and        |   |   | End      of |   |
|                                 |   | of      Period  |   |   | Expenses        |   |   | Accounts        |   |   | Write-Offs |   |   | Period |   |
| Allowance      for doubtful accounts |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| Year      ended December 31,    |   |            |   |   |            |   |   |            |   |   |       |   |   |   |   |
| 2008                                 |   | $               | 903    |   |            | $      | 258    |            |   | $      | -          |   |   | $ | (232 | ) |   | $ | 929 |   |
| 2007                                 |   | $               | 793    |   |            | $      | 212    |            |   | $      | -          |   |   | $ | (102 | ) |   | $ | 903 |   |
| 2006                                 |   | $               | 588    |   |            | $      | 215    |            |   | $      | -          |   |   | $ | (10 | ) |   | $ | 793 |   |

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Table of Contents

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTINGAND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES

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ITEM 9B. OTHERINFORMATION

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, ANDDIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTING FEES ANDSERVICES

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENTSCHEDULE

| (a) | Documents      filed as part of the report: |
|-----|---------------------------------------------|

| (1) | Financial      Statements |
|-----|---------------------------|

| (2) | Financial      Statement Schedules |
|-----|------------------------------------|

| (3) | Exhibits |
|-----|----------|

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|                                 |                                                 |   |
|--------------------------------------|------------------------------------------------------|--------|
|                                 | DYNAMICS      RESEARCH CORPORATION                   |   |
|                                 |                                                 |   |
|  Date:      March 16, 2009 | /s/      James P. Regan                              |   |
|                                 | James      P. Regan                                  |   |
|                                 | President,      Chairman and Chief Executive Officer |   |

| /s/      James P. Regan                   |   | President,      Chairman and Chief Executive Officer (Principal Executive      Officer)                    |   | March 16,      2009 |
|-------------------------------------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------------------------|
| James      P. Regan                       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      David Keleher                    |   | Senior      Vice President and Chief Financial Officer (Principal Financial      Officer)                  |   | March 16,      2009 |
| David      Keleher                        |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Shaun McCarthy                   |   | Vice      President, Corporate Controller and Chief Accounting Officer (Principal      Accounting Officer) |   | March 16,      2009 |
| Shaun      McCarthy                       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      John S. Anderegg, Jr.       |   | Director                                                                                                   |   | March 16,      2009 |
| John      S. Anderegg, Jr.           |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Francis J. Aguilar               |   | Director                                                                                                   |   | March 16,      2009 |
| Francis      J. Aguilar                   |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Gen. George T. Babbitt, Jr. |   | Director                                                                                                   |   | March 16,      2009 |
| Gen.      George T. Babbitt, Jr.     |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Kenneth F. Kames                 |   | Director                                                                                                   |   | March 16,      2009 |
| Kenneth      F. Kames                     |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Lt. Gen. Charles P. McCausland   |   | Director                                                                                                   |   | March 16,      2009 |
| Lt.      Gen. Charles P. McCausland       |   |                                                                                                       |
|                                      |   |                                                                                                       |   |                     |
| /s/      Nickolas Stavropoulos            |   | Director                                                                                                   |   | March 16,      2009 |
| Nickolas      Stavropoulos                |   |                                                                                                       |

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|             |   |                                                                                                                                                                                                   |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                            |   | Herewith |   | Form                             |   | Date |
| 2.1              |   | Equity      Purchase Agreement among Dynamics Research Corporation and Impact      Innovations Group LLC and J3 Technology Services Corp., dated      August 2, 2004.                             |   |     |   | 8-K                              |   | September      8, 2004 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 2.2              |   | Membership      Interest Purchase Agreement among Dynamics Research Corporation      and Kadix Systems, LLC and Daisy D. Layman, The Sole Member of Kadix      Systems, LLC, dated July 30, 2008. |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.1              |   | Restated      Articles of Organization of the Company, dated May 22,      1987.                                                                                                                   |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.2              |   | By-Laws      of the Company, dated May 22, 1987.                                                                                                                                                  |   |     |   | 10-Q                             |   | June      17, 1987 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.3              |   | Certificate      of Vote of Directors Establishing Series B Preferred Stock, dated      February 17, 1998.                                                                                   |   |     |   | 8-A12G                           |   | June      25, 1998 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.4              |   | Amendment,      dated September 10, 1998, to the Certificate of Vote of Directors      Establishing Series B Preferred Stock.                                                                |   |     |   | 8-A12G/A                         |   | September      30, 1998 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.5              |   | Certificate      of Vote of Directors Establishing Series A Preferred Stock, dated      July 14, 1988.                                                                                       |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.6              |   | Amendment,      dated April 28, 1998, to the restated Articles of Organization of the      Company.                                                                                               |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.7              |   | Amendment,      dated April 25, 2000, to the restated Articles of Organization of the      Company.                                                                                               |   |     |   | 10-K                             |   | December      31, 2002 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 3.8              |   | Certificate      of Designation with respect to the Series B Preferred Stock, par value      $.10 per share, of the Company (attached as Exhibit A to the Rights      Agreement).                      |   |     |   | 8-K                              |   | July      25, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 4.1              |   | Specimen      certificate for shares of the Company’s common stock.                                                                                                                              |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 4.2              |   | Rights      Agreement dated as of July 23, 2008 ("Rights Agreement") between the      Company and American Stock Transfer & Trust Company, as Rights      Agent.                                   |   |     |   | 8-K                              |   | July      25, 2008 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.1             |   | Form      of indemnification agreement for directors of the Company.                                                                                                                                   |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.2*            |   | Severance      Agreement between John S. Anderegg, Jr. and the    Company.                                                                                                                        |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.3*            |   | Deferred      Compensation Plan for Non-Employee Directors of the    Company.                                                                                                                          |   |     |   | 10-K                             |   | December      31, 1991 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.4*            |   | Form      of Supplemental Retirement Pension Agreement by and between the Company      and Albert Rand.                                                                                                |   |     |   | 10-Q                             |   | March      31, 1997 |
|             |   |                                                                                                                                                                                                   |   |     |   |                             |   |   |
| 10.5*            |   | Amended      1995 Stock Option Plan for Non-Employee Directors.                                                                                                                                        |   |     |   | 10-Q                             |   | March      31, 1997 |

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|             |   |                                                                                                                                                                             |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                      |   | Herewith |   | Form                             |   | Date |
| 10.6*            |   | Amended      1993 Equity Incentive Plan.                                                                                                                                         |   |     |   | 10-K                             |   | December      31, 1998 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.7*            |   | 2000      Incentive Plan.                                                                                                                                                        |   |     |   | DEFS14A                          |   | December      6, 1999 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.8*            |   | Employment      Agreement between the Company and James P. Regan.                                                                                                                |   |     |   | 10-K                             |   | December      31, 1999 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.9*            |   | Change      of Control Agreement between the Company and James P.    Regan.                                                                                                      |   |     |   | 10-K                             |   | December      31, 1999 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.10*           |   | Non-qualified      Stock Option Agreement between the Company and James P.    Regan.                                                                                             |   |     |   | S-8                              |   | October      12, 2000 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.11*           |   | 2000      Employee Stock Purchase Plan.                                                                                                                                          |   |     |   | S-8                              |   | April      27, 2001 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.12*           |   | Special      Severance Plan.                                                                                                                                                     |   |     |   | 10-K                             |   | December      31, 2001 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.13*           |   | Senior      Management Deferred Compensation Plan.                                                                                                                               |   |     |   | 10-Q                             |   | March      31, 2002 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.14*           |   | Dynamics      Research Corporation Special Severance Plan, as amended on May 14,      2003.                                                                                 |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.15*           |   | 2003      Incentive Plan.                                                                                                                                                        |   |     |   | 10-K                             |   | December      31, 2003 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.16*           |   | Form      of grant of stock options under the 2003 Incentive Plan.                                                                                                               |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.17*           |   | Form      of grant of restricted stock under the 2003 IncentivePlan.                                                                                                             |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.18*           |   | Form      of grant of stock options under the 2000 Incentive Plan.                                                                                                               |   |     |   | 10-Q                             |   | September      30, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.19*           |   | Deferred      Stock Compensation Plan for Non-Employee Directors, as amended for      deferrals on or after January 1, 2005.                                                |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.20*           |   | Amendment      to Deferred Stock Compensation Plan for Non-Employee      Directors.                                                                                              |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.21*           |   | Beneficiary      Designation Form for the Deferred Compensation Plan for Non-Employee      Directors.                                                                            |   |     |   | 10-K                             |   | December      31, 2004 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.22*           |   | Forms      of grant of restricted stock under the 2000 IncentivePlan.                                                                                                            |   |     |   | 10-K                             |   | December      31, 2005 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.23            |   | Purchase      and Sale Agreement, dated November 18, 2005, by and between Dynamics      Research Corporation and Direct Invest Property Acquisition,      LLC.              |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.24            |   | Amendment      to Purchase and Sale Agreement, dated December 28, 2005, by and      between Dynamics Research Corporation and Direct Invest Property      Acquisition, LLC. |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                             |   |     |   |                             |   |   |
| 10.25            |   | Lease,      dated December 28, 2005, by and between Dynamics Research Corporation      and Direct Invest-60 Frontage, LLC.                                                  |   |     |   | 8-K                              |   | January      4, 2006 |

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|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | Herewith |   | Form                             |   | Date |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.26            |   | Consent,      Waiver and Amendment Agreement, dated December 28, 2005, by and among      Dynamics Research Corporation, Brown Brothers Harriman & Co.,      KeyBank National Association, TD Banknorth, N.A., and Bank of America,      N.A.                                                                                                                                                                                                                     |   |     |   | 8-K                              |   | January      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.27            |   | Third      Amended and Restated Loan Agreement, as of September 29, 2006, by and      among Dynamics Research Corporation, DRC International Corporation and      H.J. Ford Associates, Inc. and Brown Brothers Harriman & Co., TD      Banknorth, N.A., Bank of America, N.A.                                                                                                                                                                                             |   |     |   | 8-K                              |   | October      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.28            |   | Master      Unlimited Guaranty, dated as of September 29, 2006, by each of Dynamics      Research Corporation, DRC International Corporation, and H.J. Ford      Associates Inc., in favor of Brown Brothers Harriman & Co., for itself      and as Administrative Agent for each of the Lenders which are and which      may become parties to the Loan Agreement.                                                                                                        |   |     |   | 8-K                              |   | October      4, 2006 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.29            |   | First      Amendment to Third Amended and Restated Loan Agreement by and among      Dynamics Research Corporation, DRC International Corporation, and H.J.      Ford Associates, Inc. and Brown Brothers Harriman & Co., TD Banknorth,      N.A. and Bank of America, N.A.                                                                                                                                                                                                 |   |     |   | 8-K                              |   | May      14, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.30            |   | Fourth      Amended and Restated Loan Agreement by and among Dynamics Research      Corporation, DRC International Corporation, H.J. Ford Associates,      Inc., Kadix Systems, LLC as the Borrowers, and The Lenders Party      hereto and Brown Brothers Harriman & Co., as Administrative Agent and      TD Bank, N.A. as Documentation Agent and Bank of America, N.A. as      Syndication Agent, as of August 1, 2008.                            |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.31            |   | Pledge      Agreement by and between Dynamics Research Corporation and Brown Brothers      Harriman & Co., for itself and as Administrative Agent for each of the      Lenders which are and which may become parties to the Loan Agreement, as      of August 1, 2008.                                                                                                                                                                                                    |   |     |   | 8-K                              |   | August      5, 2008 |
|             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |     |   |                             |   |   |
| 10.32            |   | First      Amendment to Fourth Amended and Restated Loan Agreement by and among      Dynamics Research Corporation, DRC International Corporation, H.J. Ford      Associates, Inc., Kadix Systems, LLC as the Borrowers, and The      Lenders Party hereto and Brown Brothers Harriman & Co., as      Administrative Agent and TD Bank, N.A. as Documentation Agent and Bank of      America, N.A. as Syndication Agent, as of December 31,      2008. |   | X        |   |                             |   |   |

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Table of Contents

|             |   |                                                                                                                                                                                                              |   | Filed    |   | Incorporated      by Reference** |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|----------------------------------|
| Exhibit      No. |   | Description                                                                                                                                                                                                       |   | Herewith |   | Form                             |   | Date |
| 21.1             |   | Subsidiaries      of the registrant.                                                                                                                                                                              |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 23.1             |   | Consent      of Independent Registered Public Accounting Firm (Grant Thornton      LLP).                                                                                                                          |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 31.1             |   | Certification      of the Chief Executive Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302      of the Sarbanes-Oxley Act of 2002. |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 31.2             |   | Certification      of the Chief Financial Officer pursuant to Rule 13a-14(a) under the      Securities Exchange Act of 1934, as adopted pursuant to Section 302      of the Sarbanes-Oxley Act of 2002. |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 32.1             |   | Certification      of the Chief Executive Officer pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002.                              |   | X        |   |                             |   |   |
|             |   |                                                                                                                                                                                                              |   |     |   |                             |   |   |
| 32.2             |   | Certification      of the Chief Financial Officer pursuant to 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the      Sarbanes-Oxley Act of 2002.                              |   | X        |   |                             |   |   |

|  *  |   | Management      contract or compensatory plan or arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **       |   | In      accordance with Rule 12b-32 under the Securities Exchange Act of      1934, as amended, reference is made to the documents previously filed with      the Securities and Exchange Commission, which documents are hereby      incorporated by reference.  The dates listed for Forms 8-A12G,      Forms 8-K, Forms DEFS14A and Forms S-8 are dates the respective forms were      filed on, and dates listed for Forms 10-Q and Forms 10-K are for the      quarterly or annual period endeddates. |

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